Advertising gloom clouds picture at ITV

ITV slipped to a record low yesterday amid growing gloom about the advertising market, just one of many fallers as the FTSE 100 index entered bear market territory.

Shares in the UK's biggest commercial broadcaster were down 1.8p at 38.3p, the first time they have closed below the 40p mark. That followed warnings in the week from advertising agencies that they were expecting revenue at its flagship channel, ITV1, to be down around 13% in September.

Cutting his price target from 120p to 85p, Dresdner analyst Omar Sheikh said: "We take our assumption of a V-shaped recovery off the table."

But he remained relatively upbeat about the company's long-term prospects, pointing to the unlocked value of its production business.

"An M&A valuation for the production division could be as high as 40p-55p, yet the equity market is valuing the whole group at 40p," he said in a note. "This makes little sense. We remain buyers."

Satellite broadcaster BSkyB - which will soon learn from the Competition Appeal Tribunal whether it must cut its stake in ITV - was also down, falling 15.25p to 428p. Sky bought its 17.9% stake in ITV in November 2006 at 135p, and is sitting on a loss of almost £400m if it has to cut that holding to less than 7.5%.

The FTSE 100 tumbled 2.7% to 5261.6, taking the blue-chip index into a bear market - more than 20% down on its highest point of the past 12 months.

There were few gainers among miners despite an increase in metals values. However, natural resources group EurasianNatural Resources was the top gainer in the index, up 8.6% or 90p to £11.37.

Royal Bank of Scotland slid 17.2p to a fresh low of 182.7p following Zurich Financial's withdrawal from the bidding for its insurance arm, which includes Churchill and Direct Line. RBS has also put its Australian business up for sale in a bid to raise funds on top of the record-breaking £12bn rights issue it recently completed.

The other high street banks were also in decline.

Barclays was off 16.75p to 267.75p, and below the 282p of its share-placing with a group of sovereign wealth funds. Lloyds TSB, which has called off talks to enter the German market by taking over Dresdner or Deutsche Postbank, dropped 17p to 275.5p. HBOS lost 5p to close at 266.5p, while HSBC went down 27.75p to 732.25p.

However, buy-to-let lender Bradford & Bingley was up 2.25p to 47.5p, though still short of the 55p at which its rights issue is priced.

Vodafone was off 7.15p to 146.65p, following a report that it may face a $4bn (£2bn) tax bill in India, twice as much as expected.

Internet security specialist nCipher confirmed it had received a takeover approach from French electronics and defence group Thales. The shares had soared from 107p to 257.5p on Thursday after nCipher revealed it was in talks with a bidder, and rose again on yesterday's announcement by 26p, to close at 286p, just short of the 300p bid.

"While the door is open to a rival bid, we consider it unlikely that one will be forthcoming, and recommend holders accept [the offer]," said Ian Mitchell, an analyst at Charles Stanley.

Travel company Thomas Cook sank to another low - 9.6p to 174p - after calling off its merger with Air Berlin. Mark Reed, an analyst at Landsbanki, was sanguine about the termination of the deal. "It is worth noting that while the upside from this deal would have been very material, it was not in forecasts and as such does not result in any downgrades," he wrote in a note.

British Airways ended the day down 11.65p at 199.1p thanks to another rise in the oil price.

Shares in troubled housebuilder Taylor Wimpey recovered 2.75p to 37.75p, following a report in trade magazine Building that it was planning to sell a third of the company to a private equity investor. The company lost nearly half of its stock market value earlier in the week after admitting it had failed to tie up a £500m rescue package.

Rival construction company Barratt Developments, which has just announced 1,200 job cuts and an £85m write-down, was up 4.25p to 71.25p. The gains came despite a warning from industry body the House Builders Association that the property market downturn could cost up to 250,000 jobs once related industries are taken into account.

Project management group Amec was up 6.5p to 867.5p after its consortium was named preferred bidder for the Sellafield nuclear site clean-up contract.

Marks & Spencer fell 13p to 227.25p on the back of rival retailer John Lewis announcing a 1.3% fall in weekly department store sales, the eighth such decline in nine weeks.

Other retailers suffered: B&Q owner Kingfisher, weighed down with £1.6bn of debt and suffering from difficult trading in the UK and France, lost 7.2p to 91.8p, while supermarket chain Wm Morrison shed 8.75p to 257.5p.

Cancer drug setback

Shares in Oxford BioMedica crashed 60% yesterday after a setback to its plans to develop a kidney cancer treatment. The Data Safety Monitoring Board advised the company to stop vaccinations of its TroVax cancer therapy after the treatment showed no positive effects on patients. Chief executive Mike McDonald said the news was "clearly disappointing" but said a trial monitoring patients who have already taken the vaccine would continue. French group Sanofi-Aventis, the company's partner in the venture, has yet to decide its next step. The shares were down 11p to close at 7.5p.